Jones v. Caldwell

61 Va. Cir. 408, 2003 Va. Cir. LEXIS 220
CourtVirginia Circuit Court
DecidedMarch 31, 2003
DocketCase No. (Law) 01-213
StatusPublished
Cited by2 cases

This text of 61 Va. Cir. 408 (Jones v. Caldwell) is published on Counsel Stack Legal Research, covering Virginia Circuit Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Jones v. Caldwell, 61 Va. Cir. 408, 2003 Va. Cir. LEXIS 220 (Va. Super. Ct. 2003).

Opinion

By Judge John E. Wetsel, Jr.

This case came before the Court on the Motion for interpleader of the Defendants Caldwell and Voorhees, to which the plaintiff consented, but which was opposed by the Receiver of the Doctors Insurance Reciprocal. The parties earlier appeared before the Court and, at the Court’s direction, have filed briefs, which the Court has considered. The Court has decided to grant the Motion for Interpleader.

I. Statement of Material Facts

The following material facts are not in dispute.

Doctors Insurance Reciprocal (“DIR”) is a risk retention group domiciled in the State of Tennessee, which provides professional malpractice insurance coverage to physicians in numerous states, including Virginia and Tennessee.

[409]*409On January 16, 2003, DIR, on behalf of Dr. Voorhees and Dr. Caldwell, entered into a settlement agreement with the Plaintiff in the underlying medical malpractice case.

On January 24, 2003, DIR issued a check in the amount of $200,000 pursuant to the settlement agreement and sent the check to counsel for Defendants Caldwell and Voorhees. This is the check which the parties, except for DIR, want to endorse and interplead into the court.

On January 29, 2003, the Circuit Court of the City of Richmond entered a Final Order of Rehabilitation (“Virginia Rehabilitation Order”), which placed Reciprocal of America (“ROA”) and The Reciprocal Group (“TRG”) into receivership proceedings in accordance with Title 38.2, Chapters 12 and 15, of the Virginia Code. As recited in the Virginia Rehabilitation Order, ROA and TRG provided reciprocal insurance and reinsurance services. See Virginia Rehabilitation Order at 2, ¶ 3. The Richmond Circuit Court asserted “exclusive in rem jurisdiction” over all property and assets of ROA and TRG and vested the Virginia State Corporation Commission and Virginia Commissioner of Insurance, Alfred Gross, with “exclusive title, both legal and equitable, to all of [ROA’s and TRG’s] property, including all... assets, books, [and] records____” Id. at 9-10, ¶ 8.

DIR reinsured “substantially all” of its insurance business with ROA. Since the entry of the Virginia Rehabilitation Order, ROA has not been meeting its reinsurance obligations to DIR. Consequently, at this time, DIR does not have sufficient assets in its possession to meet its coverage commitments to its own insureds. Thus, because of DIR’s “hazardous financial condition,” which rendered “further transaction of its business without rehabilitation... hazardous financially to the insurer’s policyholders, creditors, and the public, the Chanceiy Court of Davidson County, Tennessee, entered a Consent Order of Rehabilitation on January 31,2003, over DIR, its business, its property, and its assets. See DIR Rehabilitation Order.

Similar in nature to the Virginia Order, the DIR Rehabilitation Order vests Tennessee Commissioner of Insurance, Flowers, with “title to all assets of DIR” wherever located. Id. at 3, ¶ 1. The DIR Rehabilitation Order provided that all:

bank[s], savings and loan association^], financial institution[s], or other person[s], which [have] on deposit, in its possession, custody, or control any funds, accounts, and any other assets of DIR, shall immediately transfer title, custody, and control of all such funds, accounts, or assets to the Rehabilitator, and are [410]*410' hereby instructed that the Rehabilitator has absolute control over such funds, accounts, and other assets. The Rehabilitator may change the name of such accounts and other assets, withdraw them from such bank, savings and loan association, or other financial institution, or take any lesser action necessary for the proper conduct of this receivership.

Id. at 4-5, ¶ 4 (emphasis added).

The DIR Rehabilitation Order also contains two injunctions. The first enjoins the initiation or further prosecution of any lawsuits against DIR or the Receiver:

[a] 11 persons, firms, corporations, and associations ... are prohibited and temporarily enjoined from ... the commencement or prosecution of any actions, or the obtaining of preferences, judgments, attachments, or other liens, or the making of any levy against the insurer or against its assets or any part thereof until further order of this Court.

Id. at 3-4, ¶ 2. The second injunction temporarily stays actions against insureds of DIR which are pending in the State of Tennessee.

[A]ny court in this State before which any action in which the insurer is a party, or is obligated to defend a party, is pending when this rehabilitation order is entered, shall stay the action or proceeding for ninety (90) days and such additional time as is necessary for the Rehabilitator to obtain proper representation and prepare for further proceedings. Id. at 7, ¶ 12. With respect to this second injunction, the Order affirmatively directs the Receiver to “consider all litigation pending outside this State and shall petition the courts having jurisdiction over that litigation for stays whenever necessaiy to protect the estate of the insurer.”

Id. (emphasis added).

According to the Receiver, DIR’s financial condition continues to be hazardous, numerous actions against DIR insureds remain pending in various States, and many settlements of such actions remain open and unfunded. At this time, DIR does not have sufficient assets on hand to fully satisfy all coverage obligations to its insureds, including settlements relating to its insureds.

[411]*411Pursuant to the directive of the Davidson County Chancery Court, Special Deputy J. Knox Walkup sent a letter to this Court on February 6, 2003, advising the Court of the DIR receivership and requesting a stay of this action in a manner concordant with the DIR Rehabilitation Order. The request for a stay of the underlying malpractice trial, which was scheduled to begin on February 25,2003, was denied. That trial commenced as scheduled against the remaining defendant, Caldwell and Voorhees having been dismissed with prejudice based on the settlement of the Plaintiffs claim.

In response to the February 6,2003, letter to the Court, counsel for the Receiver received a letter on February 10th from counsel for the Plaintiff. In that letter, Plaintiffs counsel stated:

the claim against Drs. Caldwell and Voorhees was mediated and settled on January 16, 2003. The terms of the settlement was a payment of $200,000.00 in cash and the purchase of an annuity in the amount of $175,000.00....
All parties were aware of the fact that the affairs of Doctors Insurance Reciprocal were precarious, and it was the intention of the parties, and indeed a principal factor in agreeing to the settlement, that the matter could be carried out to a conclusion prior to that occurring. It is my understanding that a check was issued by Doctors Insurance Reciprocal pursuant to the terms of the settlement very promptly after January 16, but was not sent to the payees, and still has not been sent. Counsel for Drs. Caldwell and Voorhees indicates that he intends to file some sort of interpleader action and deliver the check to the court, but as far [as] I am concerned, this in no way would satisfy the terms of the settlement.

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Cite This Page — Counsel Stack

Bluebook (online)
61 Va. Cir. 408, 2003 Va. Cir. LEXIS 220, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jones-v-caldwell-vacc-2003.